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Devon, an American luxury watchmaker headquartered in Pasadena, Calif., intuitively understands that the Swiss watch industry's greatest strength is also its weakness. That became clear when, in 2010, the impertinent U.S. firm burst onto the horological scene with its debut effort, the $15,000 Tread 1.

This timepiece's interior architecture radically couples a series of tiny microstep motors, which are traditionally used in medical pumps, with a programmable computer chip and a rechargeable battery. Together, they continuously drive hour and minute shingles along reinforced nylon conveyor belts, seen through the glass. The Tread 1, borrowing ideas from car and aerospace technologies, simply ignores the watch industry's traditional springs, bridges, and wheels. Even the oversize watch's glass is not the usual sapphire crystal, but made of a polycarbonate used in bulletproof windows.

These are the things that get watch nuts wound up. The Tread 1 is not a mechanical watch, but neither is it a real digital watch; it is, instead, that most American of things -- a hybrid. The most recent iteration of the watch is the Devon Tread 1 G, a smart-looking watch in gold and carbon-coated stainless steel that is made to order for $35,000.

The firm's follow-up hit is the 2012-released Tread 2, which runs on conveyor belts, 2/1000ths of an inch thick, that are traditionally used in Boeing 747 cockpit instruments. The Tread 2–range of watches cost just under $10,000 each, unless you want to wait for a coming gold version. An "exoskeleton" Tread 1 (you can see the guts) and an all-gold Tread 2 will be released at the Baselworld watch fair in late March.

The gold and steel Tread 1G above, for $35,000. The Tread 2G in gold below left, coming to market. The Adam in development, lower right, is for classic watch geeks.
Courtesy of Devon

In a cube-like clean room in Devon's L.A.-hip cinder-block office in California, three watchmakers produce the Tread 2. The 12-man operation is churning out 1,000 watches a year. Walk through the modest plant with Jeff Stephenson, the firm's fired-up top engineer, and you learn that the Tread watches have optical sensors inside that allow the embedded microprocessor to tell a repairman how and where the conveyor belts are minutely out of alignment. There is a backlog of some 200 Tread 2 orders waiting to be filled, a startling accomplishment for a U.S. watch firm that is now entirely self-financed and just six years old.

The Swiss watch industry has taken notice -- in a backhanded sort of way. In 2010, at the watch industry's equivalent of the Academy Awards, the Tread 1 was nominated for the Grand Prix d'Horlogerie de Genève's "design and concept watch prize," up against Swiss industry heavyweights like MB&F (see Penta Sept. 16, 2013) and Chopard. Devon was the first U.S. company ever nominated in this prestigious category.

At the awards ceremony, conducted in French, a distinguished Swiss gentleman got up and in effect said the Grand Prix should be given only to Swiss firms, and that foreign brands should not be allowed to participate in the competition. Scott Devon, the U.S. firm's founder, who speaks some schoolboy French, says, "We were clapping, because we didn't understand what he was saying."

That's a revealing story about how provincially myopic, at its worst, the Swiss watch industry can be. The Swiss watch industry's industrial origins date back to 16th century farmers who earned extra income by making elaborate pocket watches during the snowbound winter months. But because the Swiss are mono-focused on their watch DNA, they are bad at spotting -- indeed, usually dismiss -- disruptive watch technologies and companies when they come along.

Particularly when they come from outside of Switzerland: the most famous case occurred when Japan's Seiko first introduced quartz digital watches to the market, in 1969. In an industrial broadside, Japanese firms flooded stores with quartz watches, cutting the Swiss watch industry by two-thirds. The Swiss industry slowly crawled out of its hole in the 1980s and 1990s by focusing on high-priced luxury watches and reminding wealthy collectors of the incredible craftsmanship that goes into mechanical watches.

That strategy has worked well for the past 30 years for what is now a 21 billion Swiss franc ($23 billion) domestic industry. Now, however, another disruption is about to broadside the Swiss. Try giving today's teenagers or 20-something adults a watch for their birthday. They thank you and promptly shove it in a drawer and never wear it. Not once. When I ask my younger relatives why, their response is always the same, 'When I need to know the time, I just look at my phone.' Simply put, the Millennials think mechanical watches are anachronistic; when they enter their luxury watch-buying age, in their late 30s and early 40s, the Swiss industry's sales are likely to drop off the cliff.

Unless, that is, someone can seize the imagination of Millennials with the horological equivalent of gender-bending, fence-straddling timepieces that are both phone and watch, digital and mechanical.

That seems to be Devon's playground. Apple is famously trying to crack the idea of phone-and-Web smartwatches worn on the wrist; others in this nascent space are Samsung and Sony, plus a few interesting boutiques, such as Pebble Smartwatch and i'm Watch. But there are major problems to be solved before these curiosities are a real threat to either mechanical watches or phones with Web-surfing options. The issues mostly revolve around miniaturization. A watch-dial-size screen is simply not big enough to comfortably conduct a Web search. Another problem is battery life. How do you pack a cellphone-size battery into a slim wristwatch?

Devon's smartwatch concept turns the entire wristband into a battery.
Courtesy of Devon

Penta has obtained, exclusively, a look at Devon's answer to that problem, seen here, at left, in their prototype design. The entire wristband is a disguised battery, an elegant technical solution staked out in a pending patent.

"What that solves is the drainage issue; you always have a fresh band that is charged, that can clip on and off," says Scott. Devon might license its patent while it works with Intel's powerful new Edison chip on a new smartwatch.

To that end, Scott has created Devon Tech Labs and is talking to private equity. "This is a little beyond my [financing] capabilities," he says. "We're competing against Apple and whatnot."

Scott Devon, 52, the son of a frozen-baked-goods entrepreneur from Grand Rapids, Mich., took over his father's $20 million firm in 1995 and quadrupled sales. It allowed Scott to become a West Palm Beach resident, and a respected polo player with an expensive hobby designing fast cars. That's how he met a car designer with some wild ideas and some basic Tread 1 sketches. Swiss watch manufacturers all politely said, "You're crazy."

Scott teamed up with an aerospace manufacturer and came up with Tread 1's hybrid solution. "I don't really think I am in the watch business. I really think I am in the technology business," he says. "We're more of a spinoff of Apple than Rolex. It's also part of the Californian culture."

Sounds good until you realize that Scott is competing with the battle-toughened Swiss, who perhaps see in him an unfocused American dilettante who doesn't think he is in the luxury-watch business and is likely to make a few missteps.

Luckily, Scott is backed by Ehren Bragg, a former Ferrari regional sales manager, the entrepreneur's "counterbalance." Talk to them jointly and it becomes clear that the Swiss dismiss the Pasadena team at their peril. While working on smartwatch technology, for example, they are simultaneously nurturing Devon's reputation with passionate collectors of mechanical watches.

Check out our exclusive picture of Adam, an electromechanical watch in development. Adam's crisscrossing time belts come up flush against a domed crystal for a 3-D effect, says Bragg. An all-mechanical version is also in the making.

By finding a unique path somewhere in-between the Swiss mechanical watch industry and the latest U.S. Silicon Valley technologies, Devon is well on its way to becoming a heavyweight next-generation luxury-watch brand. If it can stay focused.